IOT's

Investment Analysis Clubs Saul’s Investing Discussions
1

I am no expert on these but there are now several IOT stocks bouncing around these parts:

UBNT
SWIR
CAMP
INVN
SYNA
SKWS

Just curious if we can discuss these? I am trying to concentrate my port, I would really like to have around 20 positions but I can’t seem to get under 30 because I always see a new one I would like to follow. I think this decreases returns, and 20 or less would be better.

UBNT is a big position for me- I love the idea of the new business model, the user community, this makes sense to me and valuations are good.
INVN is a small-middle one
SYNA small to middle.

They all do slightly different things, are all small-mid caps, all growing some more than others.

Which ones do you guys hold and why?

Gator

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Just curious if we can discuss these? I am trying to concentrate my port, I would really like to have around 20 positions but I can’t seem to get under 30 because I always see a new one I would like to follow. I think this decreases returns, and 20 or less would be better.

Gator,

I the Spring of 2013 I had 66 positions. I knew it was too many. Many of them were a very small part of my portfolio. Some I had bought but didn’t do much while others had grown a lot making me reluctant to sell due to taxes. Having too many positions can also make you more lazy in terms of following the company. If it’s a small position then it can’t hurt you much.

In the Spring of 2013, I decided that I wanted to get down to 30 positions. By the end of the year, I was down to the low 30s. Today, I have 22 positions, and I feel very good about most of the companies that I own. I also understand the companies in my portfolio much better than I previously did.


UBNT	11.0%
SYNA	9.9%
AMBA	7.5%
BOFI	7.0%
MELI	6.0%
SZYM	5.8%
CELG	5.7%
LKREF	5.6%
PFIE	4.8%
BWLD	4.8%
CASH	4.6%
INVN	4.1%
PRAA	3.7%
AIOCF	3.5%
TTS	3.3%
AFOP	3.3%
CMG	3.2%
UA	2.7%
CTRP	2.2%
AEYE	1.7%
CBI	1.5%
PSIX	1.2%
ARNA	0.8%

Cash is not a position; it’s my available cash. AEYE will be sold opportunistically. The 0.8% is ARNA is the short puts calculated as the cash required if someone exercised the puts and I immediately sold the shares. I’m thinking of trimming UA due to high valuation. I will likely trim AMBA down to 6%. I may increase BOFI from 7% to 8%. Otherwise, I feel very good with my allocations and my stocks.

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3

Which ones do you guys hold and why?

Hey Gator,

I don’t have as much IOT stuff as you, but here goes.

I also own SWIR (1.21%) and UBNT (1.94%).

If you are considering companies that aren’t pure plays, I also have GOOG (4.59%) and INFN (1.7%). INFN, not to be confused with INVN, is a company that supplies fiber optic equipment to the telecoms.

INFN has been pretty much in neutral for years. It seems like we are on the cusp of an upgrade cycle that should benefit them. But who knows.

Take care.

Jeb

4

Hi Gator,

Like Gaucho Chris, my top two positions are UBNT and SYNA. I also hold a medium size position in SWKS, which is just a few weeks old so it hasn’t had a chance to grow into one of my biggest positions yet. (Note the “yet”).

I toyed with SWIR and INVN but didn’t stay with them.

Saul

5

I have an unwieldy number of stocks, but most of them are small holdings. I do this so I do not miss big winners. When I started investing with Motley Fool I bought some of the hyped stocks, Dolby comes to mind. I did not really understand the marketing model and how out of sync it is with the real work of investing. I figured that I needed to align with TMF if I wanted to get an improvement in returns. Big Mistake, huge.
When the marketing arm gets ahold of a stock, it is really akin to pump and dump- it ramps up like crazy and drops like a stone when the cycle ends. I sold all my hype stocks but retained a small fraction of the shares so that I would follow them. Dolby was dead money for a long time, but it has really come back, that made me go look at it for what innovation was going on, and I have to consider it for large chunks of capital. I have my eye on it and may add significantly if Dolby vision catches on.
I am not advocating this for anyone else, but just sharing what I do. I have been an investor for a long time and I have very good returns, but I know I can do better. The difference in the high teen in returns and 30% returns is astronomical. I saw Saul and others with truly exceptional returns and decided to reach higher for better returns.
I do not spend a lot of time on stocks with less than $10,000 dollars invested, but I do know when they are getting market beating returns and go look at them for further capital if the trends look good and the runway is long. I am willing to have the drag on return of these smaller returns, so as not to miss the big winners. I just find it hard to follow stocks without some money on the line.
I would like to learn from Saul and let go of winners that have had a run. I am still sitting with my 3D printers and my PSIX, I would have been better off to let them go after they had their runs. Still learning. But I have not really learned enough about how to make those decisions. So I sell most but not all of my position when I have had a really good run.

Not sure if this addresses what you are asking, but you will never get better asking the what, bro me the real question is “how did you decide” “what was your process”?

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6

that was supposed to say “to me” the real question…

Gotta love Siri

7

So it seems a lot of people are holding 1-3 like I am (UBNT, SYNA, INVN for me).

SWKS perked my interest, but not wanting to keep increasing positions I wondered if I like it better than the others. INVN was the obvious comparison, and they are both semiconductor stocks. The chips do different things but both chip stocks. Chips become commodities (NVDA)from competition that I am loathe to be holding multiple names.

INVN-
2.3B
PE For 23.8
P/S 8.7

 		2010-03	2011-03	2012-03	2013-03	2014-03	TTM

Rev's		80	97	153	209	253	263

Earnings's	—	0.14	0.39	0.62	0.07	(0.10)

So great Rev growth, not seen in earnings yet. This looks to be due to increasing operating expenses including sales and R and D, as gross profit is increasing nicely with revenue.

SWKS
10.5B
PE For 13.9
P/S 5.2

		2009-09 2010-09 2011-09 2012-09 2013-09 TTM

Rev's		803     1,072	1,419	1,569	1,792	2,050

Earning's	0.56	0.78	1.24	1.09	1.48	1.97

Slower revenue growth but EPS is coming along very nicely in last few years with significant growth. They are growing operating expenses as well, increasing R and D, but more gradually. This one is larger and seems more measured. So The multiples are smaller.

Saul,
Care to comment about why you prefer SWKS over INVN? I think you said you sold to add to other positions, so that doesn’t mean you saw something bad, just something you like better.

Both seem like nice companies to me, but that is how I end up with too many!

Gator

8

I can’t believe you typed that whole message in Siri BTW Flygal! I can’t even get a decent text message done while driving. It cuts my message off every time I pause for a sentence! Guess I need practice.

9

I would like to learn from Saul and let go of winners that have had a run. I am still sitting with my 3D printers and my PSIX, I would have been better off to let them go after they had their runs. Still learning. But I have not really learned enough about how to make those decisions. So I sell most but not all of my position when I have had a really good run.

Can I propose an alternate view. Right now, if you have invested in DDD and PSIX, it appears as if you were better off selling the stock at their respective highs as they have dropped a fair amount below these highs. However, this alone does not mean that new highs will not be breached. DDD and SSYS, for example, can be many times their current size, right? We could argue that if the 3D printing market truly comes to fruition the eventual market opportunity would be very very large. If so, you could possibly have a very large winner and selling now might not be the best thing to do. The same goes for PSIX.

The other day, I was reading a nice post by Fletch where he argues that a stock has a lofty valuation because the market participants believe that it will indeed do well. The market does occasionally get its valuation wrong but more often than not it is quite good at assigning value to companies. In fact, if it was always doing a poor job of assigning value there would be no market. Using this argument, one could say that PSIX, DDD, and SSYS are potentially solid investments for the long run and the market’s high valuation says that most participants agree with that view.

Finally, with respect to selling, this is probably the hardest thing to master. Why? Well, intuitively we need two correct decisions, one for the sell to be a good decision and another for the replacement buy to be a good decision. Its hard to get both decisions to be right! Jim Mueller has written a lot about this. Hence, many successful TMF investors like John Seargant (jseargant), Anurag Gupta (anuraggupta), and Vish (iVish) seldom sell. They just let the stocks do their thing and let small positions become bigger over time almost organically.

John also posts a lot about this performance and he’s very transparent with all his spreadsheets etc. Additionally, using puts to juice some returns can be very meaningful.

Anyways, I thought some alternate view might be helpful …

Anirban

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10

Gator,

I hold CAMP, SWIR, INVN, and UBNT, but I don’t consider my UNBT investment to fit the IoT bucket. I have about 3-4% invested in each of these companies.

Anirban

11

Hi Gator,

Which ones do you guys hold and why?

I own all of them except CAMP. I don’t think UBNT is an IOT stock but it’s one of my larger positions:

UBNT is 5.7%
SYNA is 4%
INVN is 1.8%
SKWS is 1.7%
SWIR is .7%

I have options on all of these stocks except UBNT and SYNA which are either making me money or offering the opportunity to double my position depending upon which way the wind blows. The smaller the position, the higher the amount of options that I am currently involved with.

I considered selling INVN when I bought SKWS but decided the IOT is big enough for the both of them.

Why? Other than they have been recommended and perform as expected, I really have no overriding strategy for this group of stocks.

I try to keep the smaller stocks down to a dull roar. THey are the most exciting but also the riskiest but if they have an edge that others don’t either due to management or product excellence, I hold onto them.

Hope this helps
Mykie

12

I hold SWIR, UBNT, CAMP and CODE as part of my IOT play. I want to top up CAMP and maybe double up on UBNT as well as take a position in QCOM, ARM and INVN (which I see as much to do with Visuals, interfaces and Augmented Reality along with SYNA).

I agree out of all of these UBNT is the least IOT although I see it as part of a related mega trend arena - the cloud. Effectively Wifi represents another last mile opportunity for cloud connectivity. It might be a hotspot way of operating “things” via mFi so it could help converge the cloud and IOT sensor/controls. In other words UBNT is the “Internet” part of IOT via wifi connectivity.

Ant

13

Just started on this board lately. What is IOT ?

thanks

14

Just started on this board lately. What is IOT ?

thanks

It stands for Internet of Things. It considers a time where everyday items are networked and on the internet. Everything from toasters and thermostats to traffic lights and trash cans. Many predictions are placing the value of this sector in trillions of dollars within the space of just 10 years.

Jeb
Long UBNT, SWIR

15

I have UBNT (stock and calls), SYNA, SWKS, AMBA, INVN, and LT calls on CAMP.

Most of those are a bit less than my target size at the moment, but I am in the same boat that Chris mentioned he was in a year or so ago with too many positions, so I have been working to clean that up.

Personally I hate the idea of IOT. I have no interest for my fridge to tweet me when the GPS senses I’m driving by the store to tell me I’m out of milk, or for a connected thermostat that raises the temp when my wifi scale thinks I may get cold because I lost some bodyfat or whatever else. :wink:

I mean, it’s cool in a tech sense, but I find in practicality, a lot of this stuff is just more trouble than its worth at the moment. Most things just don’t need to be connected. And of course any connection leads to a possible security break in your network or an additional aspect of something that can malfunction.

While I quite enjoy the tech we have, I think most of this stuff has a long way to go to get where it needs to be to actually make me want to bother with using it… hence why I think it’s fantastic investment play from a basket perspective even if I don’t really want many of the current applications of it beyond what goes into my phone.
Just need to keep an eye on earnings to make sure they keep innovating and not becoming commoditized over time.

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16

Gator, I dictate posts via my iPad. Usually a sentence at a time, I have to do some edits but I miss things form time to time. But it does save me a lot of time.

My mother raised me to NEVER EVER learn to type, she said that if I typed every workplace I went to would set me to work typing. And it was true, people tried. When I left flying for the Air Force in 1985, I went to Space Division I was supposed to work in accounting, but they needed someone to type the Program Manger’s slides (a very senior officer) fortunately I could not type. The officer made me his chief of staff instead which was a job for a person two ranks higher than mine…

I never really did learn to type, I struggle along at 15 WPM.

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17

My mother raised me to NEVER EVER learn to type, she said that if I typed every workplace I went to would set me to work typing.

Back then that was very sage advice to a woman.

On the other hand I believe that today it should be taught in grade school. (It looks like Mavis Beacon is still around for about $30.)

18

Saul,
Care to comment about why you prefer SWKS over INVN? I think you said you sold to add to other positions, so that doesn’t mean you saw something bad, just something you like better.

Gator, I prefer companies that are making money and are also at a lower PE ratio. I really don’t think the two companies are comparable.

That doesn’t mean INVN won’t get its act together sometime in the future and start doing great, but SWKS seems to be there now.

Saul

For FAQ’s and Knowledgebase
please go to Post #2848

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I don’t know about everywhere RH, but in my part of Kansas, my daughters had to pass a keyboarding (typing) test in high school or take it as a required class. Now if they would make Personal Finance a required class!

Bill
short on my own typing skills

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I WORKEd to get to 15 minutes, but really dictating works pretty well now so I’ve quit working on my typing.

I typically sit on my couch with my leg up because I do have quite a bit of swelling at the end of the day because of an injury. So dictating just really works well for my life and it’s surprisingly easy on him iPad, when the keyboard comes up there’s just a little microphone icon. And I have dyslexia so I’ve never been a great speller. I know much more vocabulary than I can spell, I find myself compromising what I want to say because I can’t spell it, so again dictating works better for me.

But every once in a while I miss something really off-the-wall and my post comes out nonsensical.